This could be the beginning of the end for the car-insurance business

Flickr / Hugo A. Quintero G.
In 25 years, technological advances may render car ownership as we know it obsolete. The car-insurance industry may be buried right beside it.

Self-driving cars and ride-sharing programs will completely disrupt the car-insurance industry, said Deutsche Bank on Monday in a note about auto insurer Progressive.

The analysts downgraded Progressive, citing underlying fundamentals for the company in its current form but also raising the possibility that the new technology will make its primary business outdated. The note said:

"We believe the concurrent rise of instant ridesharing and autonomous vehicles presents real questions as to whether there will even be an auto insurance industry as we know it in 20 years, what percentage of cars on the road will be essentially accident-free in 10 years and whether to acknowledge in just 5 years that this isn't some 'George Jetson' fantasy."

The note highlighted three key changes coming with the new technology:

"Accident frequency will decline to where the difference among driving behaviors becomes negligible and it is difficult to charge a meaningful premium for insurance."

"Insurance will take the form of commercial product liability instead of personal driver liability as we let the robots do the driving."

"Vehicle utilization will rise and cars on the road will decline as one car can serve the driving needs of multiple travelers per day, which, in-turn, means fewer cars."

Basically, the insurance on a car would transfer from people owning and driving cars to a less-lucrative system where self-driving and ride-sharing companies insure cars like any other product.

Deutsche Bank said that Progressive is particularly exposed to these changes as many of their policyholders are young people are more likely to adopt new technologies.

While the note says that the auto-insurance companies could adapt to these changes, there is a possibility that firms such as Progressive won't exist in this brave new world of transportation.

Said the report: "Progressive may find its way to dominating this new kind of auto insurance world, but it also may find its products completely unnecessary in 2030."